Bond traders are begging new Fed chair Kevin Warsh for a rate hike — no matter the impact to your credit card bills Bond traders are counting on the new Federal Reserve chair Kevin Warsh to do one thing: Raise benchmark interest rates, and soon (1).
Yields on two-year Treasury notes reached (2) 4.16% on Tuesday, their highest level in a year and sharply higher than the Fed’s current benchmark 3.50% to 3.75%
It ticked down to 4.13% later in the afternoon. Must Read Two-year bond yields are viewed as a reliable forecaster (3) of Fed interest rates, which influence borrowing costs for credit cards, car loans, and residential mortgages. Hiking interest rates makes borrowing more expensive for consumers.
These yields have climbed since March, illustrating the growing investor expectation that the Fed will be forced to confront inflation with at least one rate hike in the near future. It’s a distinct U-turn from the start of the year, when some financial analysts believed two or even three rate cuts (4) were possible to prop up a lackluster labor market saddled with tariffs and amplified economic uncertainty. An early test for new Federal Reserve Chair Kevin Warsh Bond traders and some members of the rate-setting Federal Open Market Committee (5) at the central bank are on the same page.